VIVA ENERGY SNAPS UP COLES EXPRESS
FUEL retailer Viva Energy will buy Coles Express to become Australia’s largest fuel and convenience operator in a $300m deal.
A previous alliance deal between the pair will be terminated and Viva will buy the business for $300m, reducing to $143m after taking into account working capital and existing fuel stock.
It will own 710 sites across Australia after the deal which will be funded from existing cash reserves and debt. Oneoff integration costs are expected to be about $120m$140m over the next three years with the buyout, subject to competition regulator approvals, expected to close in the first half of 2023.
Some 6000 Coles Express team members and support centre staff will be offered roles with the Viva Energy retail business on at least the same terms and conditions.
Land occupied by Coles Express at the sites where the supermarket retailer is the subtenant of Viva Energy, reflecting 664 sites, will return to Viva Energy.
Viva said the convenience stores would continue to trade under the Coles
Express brand on a transitional basis, but over time will carry a new store brand to reflect Viva Energy’s “long-term positioning of the convenience offer”.
Existing loyalty programs, including participation in Flybuys and the 4c per litre fuel discount dockets with Coles supermarkets, will continue, according to Viva.
Viva said the deal handed it $1.14bn of convenience store sales revenue on a pro-forma basis for the 2021 financial year, $45m-$70m to FY2021 retail earnings on a replacement cost basis and earnings per share accretion of 11-18 per cent relative to FY2021 based on a proforma, post integration basis, before synergies.
Coles CEO Steven Cain said Viva was well-placed to grow the Express business with Coles to strengthen its focus on its supermarket and liquor businesses.